Novell swings for the fences in SCO filing

Another court filing, another apparent blow to SCO. Novell's latest move could …

The tussle between SCO and Novell has largely played itself out in the shadows of the higher-profile war between the litigation-frenzied Utah-based company and Big Blue. By way of a refresher, SCO originally threatened to sue Novell in November 2003, alleging that Novell violated a noncompete clause it signed with SCO predecessor company Santa Cruz Operation when it became a Linux reseller. Once the suit was actually filed, SCO switched tactics and accused Novell of "slander of title" over Novell's disputing that SCO owned the copyrights to Unix. Since then, the case has taken a back seat to the IBM-SCO fight as the two sides have moved through the discovery process and towards a trial at some (presumably distant) point in the future.

If the allegations made by Novell in its latest court filing and request for a preliminary injunction on Friday are true, SCO could be in for a world of hurt in both lawsuits. The central question in the Novell-SCO suit is "who owns the copyrights related to Unix?" SCO claims that it acquired the copyrights to Unix when Santa Cruz Operations purchased UnixWare back in 1995, which Novell disputes. So far, the evidence has been favorable to Novell, as the minutes of a Novell Board of Directors explicitly stated that Novell still owned "all of its patents, copyrights, and trademarks" related to Unix.

Novell's latest filing turns up the heat on SCO on multiple fronts. First, it's going after SCO's dwindling bank account. Novell claims that the 1995 agreement gave it the right to receive royalty payments for any new Unix licenses sold by SCO. This encompasses the now-infamous SCOSource license along with SCO's deals with Microsoft and Sun. In addition, Novell has not been allowed to audit those transactions, even though SCO has supposedly acknowledged its right to do so. As a result, Novell is asking the judge for a preliminary injunction against SCO that would put all but 5 percent of SCO revenues in escrow immediately, as SCO is quickly burning through its cash on hand. If the request were to be granted, it would put SCO in a severe financial bind, making further operations difficult.

Related to the question of auditing licenses, Novell claims that it is "entitled at its sole discretion, to waive its purported claims against IBM, Sequent, and other SVRC licensees." In other words, Novell is claiming that the language of the original deal gives it veto power over enforcement actions SCO might take regarding Unix licenses. If that turns out to be the case, Novell would put an end to the IBM lawsuit. Of course, SCO's own admission back in 2002 that an audit could find no infringing code might take care of that just as well.

Perhaps most interesting of all is the allegation that in late 2002, SCO CEO Darl McBride contacted Novell in an attempt to amend the language of the 1995 transaction agreement to give SCO unfettered control over Unix copyrights. The implication is huge: SCO knew even before launching its first lawsuit that there were serious questions as to whether it really owned the copyrights to Unix. That assertion is the basis for all of SCO's legal actions, and if SCO doesn't own the copyrights after all, then their legal actions, followed by the company itself, will vanish in a puff of smoke. Yes, the trial is still years off at this point. However, the judge will have an opportunity to rule on Novell's request for a preliminary injunction, which would have dire consequences for SCO.